Sell in May and Go Away?

April 28, 2006 · Print This Article

I guess we should revisit the question I posed yesterday; Could this be the final stages of the 2006 bull rally? Or is it the beginning of a sustainable move to historic highs? Well, the “sell in May and go away” theory doesn’t really start until the fourth trading day of the month. The first three trading days of May have been historically bullish. If the seasonal pattern holds true again this year, and that is a big IF, then we could be in store for another nice setup. Currently the SPY and DIA are overbought and a few more days to the upside could push them into ”very overbought” territory, which is usually a good time to start looking at in-the-money puts for a short-term play. I would much rather see a “very oversold” condition as it is much more reliable, but with all the technical and seasonal patterns lining up I really like the possiblities if the indices advance. But, as I said, everything has to go as planned. I hope it does because I absolutely love to see extremes in the major indices and I am hoping to see this situation occur next week. I hope you have a wonderful weekend.

Daily Articles of Interest